TURF WAR:
July Check-in
The supply context means prices have little traction beyond modestly higher levels.
Turf War: July check-in
The USDA has updated its global crop estimates. The July set is, as expected, little different from the June set. Market thinking is somewhat more optimistic on supply. The supply context means prices have little traction beyond modestly higher levels.
Wheat
The USDA’s latest numbers are, globally, a shade tighter—but still not tight.
We’d mark those numbers a shade tighter. The USDA left their Australia (31mmt) and China (142mmt) production estimates unchanged. We suspect both will be modestly lower in time. Yet, even allowing for those changes, the global balance sheet would not be ‘tight’.
Coarse Grain
The USDA’s coarse grain numbers are now just a shade tighter for season 2025. The USDA made many minor tweaks to their season 2024 and 2025 estimates. But those tweaks largely offset each other.
These numbers do not adjust for several issues currently occupying the market’s mind.
Perhaps the major issue is US corn yields for season 2025. The USDA will continue to use a trend of 181bu/ac until they have survey evidence. The USDA’s yield estimate is high anyway. Market chatter is about even higher numbers, into the mid-180s. Yields at those levels would obviously add a lot of supply.
The USDA, unsurprisingly, did not alter their estimates for the dry weather in Western Europe. We think there have been some losses there already (see The Watchlist). The losses, though, are highly unlikely to be large enough to offset higher yields in the market’s imagination.
In summary, world coarse grain supply is still set to ease materially in season 2025. The debate is about the extent of the easing.
Oilseeds
The high level for oilseeds is almost unchanged in these new estimates. Supply is on track to lose a shade of comfort in season 2025. But, supply will remain close to neutral.
